Anyone who has had the unfortunate privilege of shopping for real estate, can attest to the emotional roller coaster of finding the perfect fit at the perfect price.
Especially for first time homebuyers.
What starts out as a glamorous Pinterest board is quickly replaced by Saturdays spent at crowded open houses, balancing your exterior poker face against your internal excitement.
But then you find “The One.”
You call your financial agent and crunch numbers in your spreadsheet, only to find that home inspection + land surveys + legal fees + land transfer tax + insurance + moving costs + renovations and + the biggie, what the home will actually cost you post bidding war, not the shiny sticker price—creates a “Full Financial Picture” (FFP) that may be more than you bargained for.
Any big purchase breeds anxiety. Our experience shows us that there are always additional costs lurking in the shadows, waiting to burst our bubbles and drag us back to reality. From buying a car to purchasing a laptop, you’ll need to factor in: tax, warranties, maintenance, shipping, additional features, etc.
The point is, we’re primed for these “hidden fees” and purchasing a new GMS is no different.
The point is, we’re primed for these “hidden fees” and purchasing a new Grants Management System (GMS) is no different. As one of the biggest technology investments you can make for your organization, the anxiety of not having the FFP is very real. One of the most common questions we hear from our clients is, “what will it actually cost?”
In this post, we’ll tackle that anxiety head on by breaking down cost and value to give you a look at the full picture you should consider when purchasing a new GMS.
Disclaimer: Cost estimates can vary widely (from $10,000 to over $1 million) depending on the size and complexity of your situation. While we can’t cover every scenario, we will surface areas of pricing to be aware of.
In most cases, the biggest one-time cost you will incur for your new GMS is the implementation—the cost of configuring the system to your specific needs. The scale increases based on complexity, with “out of the box” systems on one end of the spectrum (requiring less configuration), and more complex configurations on the other end.
“Out of the box” solutions with less configuration options are reflected in their cost, which puts them in the lower price range. These systems are designed to work in a specific way with little to no customization—if your requirements line up with that, you’re in luck. As you can imagine, the more complex your requirements, the more customizable your solution will need to be. This would bump you to the higher price range.
Some requirements that will land you in the upper echelon of cost are: multiple programs and applications, complex workflows (e.g. if a grantee submits an application from Region X, assign the review to Program Officer Y), and complex automations, to name a few.
Approximate Cost: $0 - $1 million+
If you’re building a house, think of your implementation team as your tradespeople and your implementation support team as your general contractor, with architecture shared across both roles. GMS implementations are a big job, and not just the build.
Managing an implementation in addition to your day-to-day work could be like taking on another job.
Managing the build and all its contingencies and decision-points involves a lot of work as well. This often includes: triaging information requests from the implementation team to the SMEs of your organization (i.e., What bathroom fixture do you want?), supporting resolution of issues that require business decisions (i.e., Your preferred fixture is not available—now what?), monitoring scope to ensure it matches your required scope (you wanted sliding doors to the closet, not accordion), continually monitoring the start of work dependent on other tasks (i.e., the wiring is all done, so the drywall can go up now).
Then, after the build, you still need time and resources to test everything you’ve built, and make any necessary revisions. And all this is assuming that you’ve already decided on the exact specifications of what you need.
Managing an implementation in addition to your day-to-day work could be like taking on another job. If you have the capacity to manage a large project (perhaps a lull in the granting cycle, a clear understanding of system architecture, and a personal interest in planning and tracking large projects), then you’re likely in a good spot to save these costs and manage the project yourself. If not, you should consider hiring support to manage the project throughout the duration—either in the form of hired help or a new FTE (Full-Time Equivalent staff).
Approximate Cost: $10,000 - $80,000
Integrations (for additional Apps & Tools)
We have yet to come across one GMS that can do absolutely everything, and that’s okay. Vendors can’t build one tool that will work for everyone, but what they often do is enable other tools to work with their product through an API (“application programming interface”). Some GMSs will have a “turnkey” API integration that can connect automatically to another tool—like a door, where all you need is the key to open it. Other GMSs have an “open API” strategy, meaning they may not have direct integrations but they have documentation that would allow you to build your own custom integration—like a blueprint to build a door. We often see integration requirements for OFAC checks, communication tools, and sometimes more complex ones like integrating with a financial system.
We have yet to come across one GMS that can do absolutely everything, and that’s okay.
The key consideration here are:
- Will your GMS replace some existing tools? Some GMSs can replace the need for apps you’re currently using.
- Does your GMS have turnkey integrations with tools you’ll need to keep? For example, with a MailChimp integration, you’ll need to pay for the integration as well as the tool itself.
- Or will your GMS require more complex custom integration with another system (e.g., Quickbooks or Intacct)?
Each of these will all affect the full financial picture.
Approximate Cost: $500 - $25,000
Implementation and configuration are one thing, customization is quite another. You can think of implementation/configuration like changing the interior decor of your house, from adding new furniture to changing out your front door. Customization is more akin to restructuring a wall or adding a whole new room to your house.
Customizing a GMS is like paying the vendor to build you a custom feature. Whether or not you need customization depends on the complexity and uniqueness of your requirements. And every system is different. The more complex the customization, the higher the cost.
We don’t often see customization requests except from large foundations or very complex builds. In these cases, the foundation might work closely with the vendor and their requested customization may even end up becoming a next step in the vendor’s product development pipeline.
For most foundations and straightforward builds, the cost of customization can be zero.
Approximate Cost: $0 (no customization) - $50,000
Licensing fees are subscription fees that are paid annually or monthly to your GMS vendor. The licensing fees are based on pricing models, which vary widely in the GMS arena. Models may be based on any combination of: the number of users (full and part time staff using the system), the number of applicants, the number of programs, the amount of your endowment, or pricing tiers where each tier includes certain features. Each GMS system has its own structure, which can make it difficult to compare apples to oranges. Focusing on the value delivered for the cost will help you see the big picture.
Approximate Cost: $5,000 per year, up to over $100,000 per year for large foundations
Most GMS systems provide help desk support as a part of your licensing fees. General help desk support typically involves access to a knowledge base of self-serve support materials, and logging tickets through an online support system that is then handled by the vendor’s support staff. Some vendors may also allow you to submit tickets via email or by phone. You can expect vendor support staff to help you solve minor issues within 1-2 weeks and urgent issues within 1-2 days. Of course, this all depends on the volume of tickets being processed and where your ticket sits in the queue.
Depending on your comfort with system administration (are you comfortable making minor changes to your system on your own?), user requirements (are you serving donors, member-funds or high-volume applicants?) and the complexity of your system (Is there a lot of custom work and integration that requires maintenance?) you may want to pay for something more involved than general help desk support.
Clients will typically choose an enhanced support package with their vendor or third-party implementation team (external to the vendor), depending on their answers to the above. Support packages are sold in various ways:
- As blocks of hours, which expire after a set amount of time (often 6 to 12 months)
- As a recurring retainer fee (monthly or yearly)
- At an hourly rate, paid based on the amount of time needed to resolve your issue
Some support vendors will also offer training, where they can help onboard new staff at your organization or help existing staff upgrade their skills.
Approximate Cost: $4,000 - $20,000 per year
Ongoing Maintenance and Add-On Subscription Fees (Integrations, Additional Apps & Tools)
If you are using other tools to supplement the capabilities of your GMS, such as integrations, plugins/add-ons, and or software (e.g. email marketing, accounting), you may need to consider on-going costs to maintain these other tools as well. This can include both subscription fees to use these tools as well as the cost of human resources to help you maintain integrations.
Integrations require ongoing maintenance—it’s never a “set it and forget it” scenario
On this last point: integrations require ongoing maintenance—it’s never a “set it and forget it” scenario. For example, If you’re integrating your GMS with your financial system, you’ll want to maintain this regularly. This may be contracted to a support team (see above) or in-house if you have the skills on your team.
Then, you’ll also want to consider the ongoing licensing fees of your other tools and systems to get your full financial picture.
Approximate Cost: $0 (no other tools/integrations) - $25,000 per year
There are two currencies in this world: time and money—if you’re short on one, the other one will cost you.
So before you dive in [to do your implementation in-house], consider if it is worth the emotional cost to your organization of putting an additional project onto everyone’s plates.
That being said, if you want to save money on any of the above costs, it will cost you in time. If you choose to manage your implementation project yourself and you have the tech talent to do your whole implementation in-house, this could mean trimming costs in exchange for staff time to put into the project. This is akin to doing your home renovation on your own rather than hiring an interior designer and building contractors to take care of it.
Before considering if you should take this project on yourself, I suggest weighing your current obligations and skills against the project at hand. Without excess time or significant expertise, taking on a project like this can be a treasure trove of frustration. So before you dive in, consider if it is worth the emotional cost to your organization of putting an additional project onto everyone’s plates.
This is a big investment. But investments done right have a big pay off. As you go through the process of purchasing your new GMS, take time to absorb the FFP (Full Financial Picture), but then take a step back and think about value.
Is the solution being delivered worth the cost of investment?
The process of starting with a shiny Pinterest board and then being dragged back to reality with the financial picture, can be explained in the “hype cycle.” Enjoy the rush of inflated expectations, but don’t get discouraged and give up on the process while in the trough of disillusionment.
Picture yourself with your feet up in front of the fireplace in your dream home. That reality is possible—and the investment is certainly worth it.
Are you considering a move to a new Grants Management System? Our team has extensive experience at the intersections of Philanthropy and Technology—and can help you make a confident, informed decision. Learn more about our Software Selection services.